Quicky on Wartsila (WRT1V)

(quickly abandonend)

This is not investment advice. Please read the disclaimer. I might own discussed stock(s) currently or at a later time.

I got to know about Wartsila in the book Quality Investing. Since they have a dense global network Wartsila is able to serve clients quickly and more cost effective if and when a ship engine breaks down. In such a case time is money, as was greatly told in the book The shipping man. Such services are sold on an ‘installed base’ in addition to other services (ie optimal route planning to reduce anchoring and waiting times). Other segments are clustered in the energy/power space.

The company was not able to grow over the last five years, despite some acquisitions. New financial targets are for 5% organic growth and 12% operating margins. Below are a few things i did (not) like. I decide to abandon the idea quickly.

I liked 

  • 52% of 2021 total sales are ‘service sales’  
  • Business model based on installed base 
  • The show historic financials for five years, incl ROIC/ROE, which might be a good indicator of value creation
  • Cashflows seem better than profits (ie, due to services being paid upfront?) 

I did not like 

  • organic growth of 5% and 12% operating target margin does not seem too great 
  • A lot of ESG focus/buzz. partially understandable since the industry is drifting in that direction (ie, ships)
  • Too many businesses / too broad 

Further reads

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